Dr. Gagnon estimates that as a result of these forces, the dollar was 10 to 20 percent above its expected value in 2019, probably costing hundreds of thousands of manufacturing jobs.
Revere Copper Products in Rome, N.Y., which makes copper strip used in automobiles and air-conditioners, has suffered from these changes. In 2000, Revere had two plants and nearly 600 workers. Today the company, founded in 1801 by that Revere, employs about 300 and operates only one plant.
The strong dollar has made it difficult for the company’s customers to compete with imports, said its chairman, Brian O’Shaughnessy. In the 1990s, for example, Revere supplied several American door-lock makers with copper or brass. Today, Mr. O’Shaughnessy said, most of the lock makers have shifted production abroad, undercut by imports made cheaper by the strong dollar.
“The industry moved offshore,” he said. “It was currency. It overwhelms everything else.”
The U.S. government could reverse these trends using one of two approaches. It could essentially fight fire with fire — buying enough foreign currency to lower the value of the dollar by 10 to 20 percent and restoring the equilibrium that would exist without foreigners’ excessive dollar-buying. Or it could tax foreign purchases of U.S. assets, like stocks and bonds, an approach prescribed in a bill sponsored by Senators Tammy Baldwin, a Wisconsin Democrat, and Josh Hawley, a Missouri Republican.
A tax would make these investments less attractive to foreigners and therefore reduce their need for dollars. It would also raise revenue for the government.
But a tax would ignite opposition from financial firms, which would see it as driving away customers, and could raise interest rates by reducing the supply of potential lenders to the U.S. government. (John R. Hansen, a former World Bank economist who has designed such a proposal, said the rate increases were not likely to be significant.)